At the end of WWI Weimar Germany was suffering from rising inflation, which was starting to get out of control. During a two year period from 1921 through 1923 Inflation was running away. During the time, nearing the end of 1923 Weimar Germany would forever be remembered as a place where one of the greatest hyper inflationary events in history took place. When hyperinflation finally took hold of Germany during this time, its devastating grasp wiped out the entire Weimar Society.
These are times where iconic photos taken of the time can be seen in history books. Photos such as a man using his German marks as “wall paper” or of people trying to buy a single loaf of bread while pushing a wheel barrel full of cash around just to pay for it. Another iconic photo of a woman burning her German marks in a wood stove just to keep the bitter cold away. At that time the money was worthless, burning money was cheaper than burning wood to use as fuel for heat. The hyperinflation was so terrible that on November 1st in 1923 at the height of the crisis 1 pound of bread cost 3 billion German marks while a glass of beer cost 4 billion and a pound of meat cost an incredible 36 billion marks.
As the Weimar example shows their devastation and suffering, this could become an economic event to reach America soon enough. Can the United States actually fall into a Weimar Style Hyperinflation?
Well below we can see startling similarities between mistakes made in the 1920’s that created and strengthened the Weimar Event along with many of the same mistakes being made by the United States and many other world governments today.
• The US Government’s unwillingness to raise taxes to support its 10+ year war costs. Looking back at Weimar the same parallel can be seen as their lack of raising taxes was a huge factor in the lack of funding for their post war re-construction and war reparation payments.
• High prolonged unemployment.
• Both the United States and 1920’s Weimar Germany operate with huge budget deficits and huge deficit spending.
• 40% of every dollar the US Government spends today is borrowed, while at the time Weimar’s Government was borrowing 50% to support its costs.
• Both have kept interest rates way below the rate of inflation.
• Both creating rapidly increasing money supplies.
Increasing the money supply is one of the most devastating factors in the creation of hyperinflation. Central Banks such as the US Federal Reserve are responsible for the creation and distribution of the paper currency they print. This 2-way responsibility creates an unbalanced supply and demand for printed money or fiat currency. With products and services attaining minimum growth at best, they do not match the “additional” amount of printed money, so the intrinsic value of this excessive money supply decreases.
Just as Weimar Germany had done many years ago, the Federal Reserve has been creating new money too, out of thin air. More recently during the last two "quantitative easing" bond buying schemes, operation twist and international dollar swaps programs with foreign central banks. Soon most likely, round three of the quantitative easing program will be coming out from the Fed. This money creation is done through speculative bets on the books of private banks; furthermore it produces nothing of value for the US Economy.
According to online usdebtclock.org at the time of writing, the United States has a federal budget deficit of $1.26 trillion dollars. The current federal spending is at $3.6 trillion dollars, the US national debt is currently at $15.4 trillion dollars and the total debt for America is now sitting at $56.66 trillion dollars. With the clowns in Washington’s three ring circus manning Congress the Senate and White House today their constant indecisions, cross line fighting and inline party fighting are helping no one. Under the big top no one can agree on any constructive reforms to stop the madness now growing into full bloom. With all these facts happening were seeing a surefire prescription leading towards hyperinflation.
The fact is we are now beyond the “tipping point” to where any constructive fiscal policies, stimulus, government intervention or anything else for that matter will reverse course on the giant fiscal engine that is driving us towards hyperinflation. Unless some kind of miracle comes around due to how the Government and the Federal Reserve have been constantly avoiding any true fix to this problem we will be heading right back into the same situation.
Worse yet since the US dollar is also the world’s reserve currency and central banks around the world are still holding both large amounts of US dollars and US debt, when the dollar finally does collapse from massive hyperinflation, the fall out will also take out or drastically affect other countries, due to the dollar’s dominance around the globe. Hyperinflation could match or even exceed the event that occurred in 1923 Weimar Germany.
Hopefully this article is a wakeup call for those sleepers out there. Bottom line is to be prepared. Time is on your side for the moment, so use it to the best of your advantage. During hyperinflation you will experience long lines for food, fuel and other necessities. You’re also going to experience over inflated extremely high prices. There is a very strong possibility in no time flat the shelves in every store you visit will be empty.
Prepare Yourself Now
Stock up now on basic food staples such as canned (cheaper) or freeze dried foods (long shelf life 15 + years) as they store well. You also want drinking water; a means to purify your own drinking water is also a very wise idea. Have prescription medications, first aid supplies, alternate cooking sources such as a camp stove as well as spare cash, and items that would be good for trading or bartering for additional goods and services as cash will be of short supply.
Another wise move would be to protect at least some of your purchasing power by holding physical gold and silver coin or bullion. As gold and silver have throughout history been a true store of value acting as an insurance policy against systemic failures and problems within financial markets within every society as far back as history has been recorded.
Tom Genot -
About The Author:
Informational news, books, articles and videos on investing in gold and silver and where the best places are to buy it. You will also find informational resources to educate you on alternate forms of investing and information on preparedness, for preparing and protecting you, your family and your assets from the pending economic crises and destruction of the US dollar. Author Tom Genot provides information and resources helpful to everyone. Insure you're prepared, while time is still on your side. Check us out at www.coinbullion.net
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